Birmingham City Council pushes shared service, cuts jobs

UK’s largest council also demands price cuts from suppliers

Birmingham City Council plans to increase outsourcing and expand its shared services efforts to save £300 million a year over the next three years, in response to the government’s Spending Review.

The council, the largest in the UK, currently has a controversial, £1 billion, outsourcing contract with Capita to provide ICT, contact centre and revenues services until 2021. It also supplies payroll services to other public sector organisations.

“There is a desire to integrate or share back office and support services with other public bodies, and where possible, sectors.

“This shared services approach will be built on to create further efficiency. Plans are in place for expanding HR and payroll service sharing,” Birmingham City Council said in its ‘Draft Council Business Plan 2011+’.

The announcement follows that of three London councils last week, which revealed plans to merge back office and IT services.

However, Birmingham City Council also proposed to make a further 30 percent saving in its support services, partly by asking its suppliers to reduce their costs. This is similar to the central government’s strategy initiated by Frances Maude, minister for the Cabinet Office, last year with its major suppliers.

According to the business plan, the council plans to reduce its core ICT contract and reduce the costs of ICT support services by £185,000 in 2011/12, and by £395,000 in each year between 2012 to 2015.

“BCC is already four years into our 10-year business transformation programme, which will yield £1.5 billion of savings through more effective, efficient and economic services delivery, including big savings in ‘back office’ services, and encouraging people to switch to cheaper online ways of contacting the council,” the council said.

Enabling people to 'self-serve' through technology is a significant area that Birmingham City Council wants to invest in, for example, it has developed a website in its Housing and Constituencies department which allows council house tenants to choose their future homes.

The council also outlined other investments that its corporate IT requires. These included refreshing the corporate ICT infrastructure, replacing the council’s internet security product, which it said is “now becoming obsolete”, and introducing more IT security systems to ensure compliancy with the Government Code of Connection to enable direct transfer of data from central government to the council.

In addition, Birmingham City Council hopes to invest in a corporate data warehouse to enable more accurate management information, and to establish corporate collaboration systems help its staff to work together and with external partners better.

Meanwhile, the council admitted that its proposals to cut £300 million a year would lead to a large loss of jobs – the axing of 4,300 council posts, with 3,000 more to be transferred to a schools co-operative.

As at 31 August 2010, the council employed just over 50,000 staff, including those in schools. This was equal to around 37,500 full-time equivalents [FTEs] overall, or 19,000 FTEs in non-school positions.

In the 12 months to December 2010, the number of FTEs in non-school positions fell by 1,807, of which 302 were compulsory redundancies.

In November 2010, Birmingham City Council indicated that its budget proposals would lead to redundancies of around 2,450 FTEs, and 1,500 staff subsequently took up the council’s voluntary redundancy offer.

The council said it wanted to minimise the need for compulsory redundancies, by potentially repeating the voluntary redundancy exercise.